An outline of the different growth strategies that any type of company can develop in general was proposed by Ansoff. This scheme, called by Ansoff as the “ matrix of intensive growth strategies ”, classifies the strategies according to the product offered (current or new) and the market on which it operates (current or new) in four modalities.
THESE MODALITIES ARE:
Market penetration strategy. The possibility of growth is considered through obtaining a greater market share in the products and markets in which the company currently operates. Thus, it consists of increasing participation in the markets in which it operates and with the same commercial format, and there may be three ways to develop this strategy: first, that current customers consume more products and services; second, attracting customers from competitors; and third, attract potential customers who are not currently buying in this commercial format. This strategy can be developed through a internal growth strategy (for example, by increasing the number of own stores) or through external growth (for example, through the purchase or merger of competing companies). For example, the market penetration strategy is the strategy most used by commercial distribution companies. This is because it is the strategy that carries the least risk, since it involves the development of similar commercial formats in the same market, that is, the development of the basic business, about which there is a high level of knowledge.
Market development strategy . This strategy implies looking for new applications for the product that attract other market segments different from the current ones. It can also consist of using complementary distribution channels or marketing the product in other geographic areas. The vending sector is an example of how to develop the market, although the most traditional strategy has consisted in the internationalization of the company, through the development of new geographic markets.
Product development strategy . The company can also launch new products to replace the current ones or develop new models that involve improvements or variations (higher quality, lower price, etc.) on the current ones. A typical example is the appearance of new game consoles such as the WII or the PlayStation 3 that have come to replace the previous models.
Diversification strategy . It occurs when the company simultaneously develops new products and new markets. The diversification of a company responds to the needs of continuing to grow in other markets when the current market is saturated or for strategic reasons. A company can diversify in a related way (in similar companies) or in a conglomerate way (in companies with little relation to each other). A case of diversification in Spain is that of the Nueva Rumasa company, which is acquiring companies from very different sectors.
Through this strategy , the company enters other geographic markets with the same commercial format . This strategy presents higher levels of risk the greater the difference between the target market and the source markets in terms of lifestyles, language, cultural environment, legal requirements, per capita income, etc.
IN THIS SENSE, WE CAN SPEAK OF TWO LEVELS OF INTERNATIONALIZATION:
First, entry into markets with a high socio-cultural and legal affinity.
Second, entry into markets where affinity is low.
In the case of Spain, the first level markets would be made up mainly of the European Union and Latin American countries, and the second level markets, the countries of the rest of the world.
THIS INTERNATIONALIZATION STRATEGY CAN BE CARRIED OUT IN THREE WAYS:
Making a direct investment (creation of own establishments or purchase of a local commercial distribution company).
Carrying out a joint-venture (creation of a new company with the association of a local company that provides market knowledge).
Export of the commercial format through the franchise formula.
One of the problems that internationalization entails is the ability of the company to face the regulations and laws of the country in question , but there is also one that can become fundamental, the repatriation of profits, since not all countries that They welcome foreign investment, they encourage profits to leave the country and, if they do, they carry very high taxes. For example, in the case of Brazil, the investments of a company there are welcome, but there are a number of innumerable taxes and legal and administrative obstacles that make it difficult to repatriate the investor’s profits.
The tax aspects therefore are a factor to consider when a company decides to make an internationalization strategy and to this end, it is important to analyze in detail the existing double taxation agreements. Another relevant factor is that the exchange policy, since it can play against the interests of the company and that it also entails important commissions every time the currency is changed.